Encumbrances on the notice: what is stated, and what silence means

Of the 2,450 Proclamations of Sale we hold, 887 state the encumbrances on the title. The rest do not. That is not the same as saying the rest are unencumbered: every one of these properties is being sold because a bank holds a charge over it, so at least one encumbrance exists on every title in the corpus by definition. The silence is a gap in the notice, not a fact about the land.

This guide is about reading that field for what it is, and about what to do when it is blank.

What an encumbrance is

A registered interest in the land that someone other than the owner holds. The common ones on an auction title:

• The charge. The bank's security for the loan — the reason the auction exists. A title can carry more than one; a second charge to another lender is not unusual.
• A lease or tenancy registered on the title. Rarer for residential property, but it binds a buyer if it is there.
• A lien or a prohibitory order. A court order, a tax authority's claim, or a lien-holder's caveat — each a claim that sits on the land until it is discharged.

The chargee's charge is discharged out of the sale proceeds; that is what the auction is for. Other encumbrances may or may not be, and the difference is the buyer's problem to establish before bidding.

What the notice states, and what it leaves out

The Proclamation of Sale is an extract of the register, prepared by the auctioneer from the chargee's papers. Where the encumbrance field is filled in, it typically names the charge being enforced and sometimes a second one. Where it is blank, one of three things is true: the drafter copied only the fields the form required; the title carries the enforcing charge and nothing else, and the drafter did not think it worth repeating; or there is a further interest the notice does not show.

A bidder cannot tell which from the notice. The register can. A private title search at the land office, ordered from the title number on the notice, returns every registered interest — and it is the single most valuable document a bidder can hold that the auctioneer did not write.

The two encumbrances that survive the hammer

Most registered interests are dealt with in the sale or discharged from the proceeds. Two kinds are worth knowing about because they can follow the property to its new owner.

Caveats. A private caveat is a third party's notice of a claimed interest — a spouse, a prior purchaser, a creditor. It is on the title, it is not an encumbrance in the strict sense, and it can block the registration of your transfer until it is removed. The site's guide on caveats counts how many notices state one.

Statutory claims. Unpaid quit rent, assessment, and for strata units the management account, are not registered encumbrances at all, and the notice will not list them. They attach to the property by statute and the conditions of sale commonly leave them with the purchaser. The land office and the local authority will tell you the figures; the notice will not.

How to read the field before you bid

1. If it names the enforcing charge only, that is the expected case; confirm nothing else on the register with a title search.
2. If it names a second charge or another interest, find out from your lawyer whether it is discharged in the sale or survives it. The answer changes the price.
3. If it is blank, read it as unknown, not as clean. Order the search; it costs a fraction of a deposit and it is the only way to know.
4. Separately, ask about the unregistered claims — quit rent, assessment, maintenance — which no notice lists and every purchaser meets.

FAQ

What is an encumbrance on a land title?

A registered interest held by someone other than the owner: a charge to a lender, a registered lease, a lien or a court order. On an auction title, at least the enforcing charge is always present, whether or not the notice prints it.

If the notice does not mention encumbrances, is the title clean?

No. Of the 2,450 notices we hold, 887 state the field; the rest are silent, and every one of them still carries the charge that caused the auction. A blank line means the notice did not say, not that there is nothing to say.

How do I find out what is really on the title?

A private title search at the land office, using the title number printed on the Proclamation of Sale. It returns every registered interest.

What this is, and is not

A count of how many parsed notices state the encumbrance field, measured at the snapshot date above, with a general account of what the field holds. It is not a search of any title and not legal advice; what any encumbrance means for a buyer depends on the register, the state and the court order.